ICBP - 1Q24 KTA AM, 1Q24 PATMI sharply declined

ICBP - 1Q24 KTA AM, 1Q24 PATMI sharply declined Indofood CBP Sukses Makmur (ICBP), earnings 1Q24 sharply declined by 40.5% yoy, as a result of soaring finance expenses 267.3 % due to strengthening USD. Yet, excluding the impact, core profit arrived at IDR3.24 tn and grew 13% yoy. On segmentation basis, noodles business revenue grew by 4.7% yoy accounted around 71.0% of total sales (+28bps vs 70.7% in 1Q23), while on EBIT level, it grew 8.5% yoy and formed around 85.3% of the total EBIT. Dairy continue to enjoy robust margin, while noodles as the backbone revenue driver considerably flattish at 27.9% vs 26.9% in 1Q23. (Source : Company) Comment : In all, 1Q24 net profit arrives below KBVS and street forecast at a run-rate of 24.8%/24.9% vs 30.5% of 5yr hist average. Despite the earnings sharp drop, worth noting that on top line level, the company continue to enjoy soft increasing cost input (-1% yoy) with around 9% of gross profit growth, GPM recorded 179bps higher to 38.2%. Likewise on EBIT level, whereas the growth remains solid (23% yoy) and EBIT margin arrived at 384bps higher yoy to 24.7%. Our main concern remains lies on the strengthening USD, while at the same time we still expect any potential increasing commodity prices would not meaningfully impact cost input and giving huge pressure to ICBP’s margin in the 2H24.